Muni Bond ETFs

Let’s give credit where credit is due. Recently, Forbes published an article that to some might seem like the kind of article that sits on the shelf until there is a slow news day and the editor is looking for a filler piece.

In fact, this article raises a number of important points that, in my opinion, all touch upon the national economic recovery and just may be the locus of the revival of small business and wealth creation.

Why is this important Muni Nation? My concern is for the economic health — no, survival — of state and local governments that issue tax-exempt debt securities in order to meet the public needs of their inhabitants. The Forbes article points to migratory population shifts (measured in part by statistics from moving companies) that I believe will have very real consequences for certain states.

As there is net “out migration,” there may typically be loss of tax revenues, user fees and consumption at the local level. Naturally, that may result in further belt-tightening for budgeting and, as we saw during the recession, jobs were cut and/or taxes were raised to meet those obligations already etched in stone. For some of the affected areas in the Rust Belt, I believe the consequences of the high cost of living and already high taxes will create painful decisions.

The article highlights the following, which might not come as a surprise, except that I believe it reflects the perpetuation of a disturbing long-term trend lawmakers should soon address.